The Recruitment and Employment Confederation (REC) has released details of discussions it held recently with HMRC surrounding the mooted application of IR35 tax laws to the private sector.

Though the REC’s spokespeople said it was “disappointed” in the government’s emphasis on these reforms, which aim to identify tax avoiders who are also contracted by various public – and soon private – sector bodies, the group also welcomed the decision to consult widely and avoid rushing changes to law through.

Three main points arose out of the REC’s meetings with the government, which comprised an REC Engineering & Technology Sector meeting and HMRC’s IR35 stakeholder forum.

First, the REC points out that the consultation planned by IR35 will be wider in scope than previously estimated. HMRC predicts that they can recover a tax shortfall of £1.2 billion by 2021/2022, a figure that has prompted the REC to ask for the model used to produce this latest projection.

There was also a point raised about the timing of the consultation. Though HMRC have yet to specify a time, the Revenue confirmed it would be in the new financial year – April 2018 – at the earliest.

The REC welcomed this news, adding it was necessary to give all parties ample time to respond in the light of other issues, including another consultation on employment status.

Finally, the REC was disappointed to learn that HMRC’s research into the effects of IR35 on the public sector failed to consult contractors or representative bodies. As a result, the REC will perform its own survey and present its findings to the HMRC and treasury next year.

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